Multiple Choice Quiz

Choose the best answer for each of the following questions and enter the identifying letter in the space provided.

1		A debtor enterprise may be denied a discharge in bankruptcy if:
			A)	It has committed an act of bankruptcy within four months prior to the filing of a creditors' petition
			B)	It was discharged in bankruptcy five years earlier
			C)	It permitted a creditor to obtain a lien on its property three months prior to bankruptcy and did not act to remove the lien
			D)	Unsecured, nonpriority creditors with provable claims will be unable to receive more than 10 cents for each $1 of their claims
2		A statement of financial condition prepared contrary to the going-concern assumption is a:
			A)	Statement of realization and liquidation
			B)	Statement of affairs
			C)	Charge and discharge statement
			D)	Statement of liquidation
3		Which of the following may file a debtor's petition for liquidation in bankruptcy?
			A)	An individual person
			B)	A savings and loan association
			C)	An insurance company
			D)	All of the foregoing
			E)	None of the foregoing
4		Which of the following unsecured liabilities does not have priority under the Bankruptcy Code?
			A)	Costs incurred by creditors in successfully opposing the discharge of a debtor
			B)	Costs of administering a debtor's estate
			C)	Claims of governmental entities for various taxes and duties
			D)	None of the foregoing
5		The bankruptcy court's alternative to dismissal of a bankruptcy petition is known as:
			A)	Confirmation
			B)	Discharge
			C)	Order for relief
			D)	None of the foregoing
6		In a statement of affairs (financial statement), a contra (offset) technique is used for:
			A)	Free assets
			B)	Stockholders' equity
			C)	Unsecured liabilities with priority
			D)	None of the foregoing
7		Wrack Company has filed a debtor's bankruptcy petition. In connection with a debt owed to City Finance company, Wrack used a false financial statement to induce City Finance to loan it $5,000. Wrack is seeking a discharge in bankruptcy. Which of the following is a correct statement?
			A)	Wrack will be denied a discharge of any of its debts.
			B)	Even is it can be proved that City Finance did not rely on the financial statement, Wrack will be denied a discharge either in whole or in part.
			C)	Wrack will be denied a discharge of the City Finance debt.
			D)	Wrack will be totally discharged despite the false financial statement.
8		In a bankruptcy liquidation, liabilities with priority are:
			A)	Fully secured
			B)	Unsecured
			C)	Partially secured
			D)	Either fully secured or partially secured
			E)	Any of the foregoing
9		A preference in bankruptcy prefers one creditor over other creditors.
			A)	True
			B)	False
10		A creditors' petition in bankruptcy must state that one or more acts of bankruptcy were committed within the three months preceding the date of filing the petition.
			A)	True
			B)	False